report re leeds bradford international airport ... · an employment land study dated october 2016...

Leeds Bradford Airport - Employment Hub Assessment

Prepared on behalf of Leeds Bradford Airport September 2017 Final report

Final Report

Contents

Executive Summary 1

1 Introduction 3

2 LBA Growth Context 5

3 LBA Growth Drivers: Policy 11

4 LBA Growth Drivers: Economic 15

5 LBA Growth Drivers: Aviation 23

6 LBA Growth Drivers: Commercial 34

7 Airport Land Development Strategy 47

8 Economic Impact Assessment 56

Executive Summary

Creating an employment hub at Leeds Bradford Airport is important to the future development

and expansion of the Leeds City Region economy. Specifically, it will:

Support the growth of the airport as a key piece of strategic infrastructure in the local economy;

Enhance the portfolio of land and premises available to prospective occupiers and investors; and

Enable the creation of substantial net additional jobs, investment and tax revenues to Leeds City Region.

The growth of Leeds Bradford Airport incorporating a new strategic employment land allocation

is recognised and supported as a key policy objective at the regional level as reflected in the

Leeds City Region Strategic Economic Plan.

Cushman and Wakefield has been instructed to update its earlier Economic Hub assessment

(which was branded under our firm’s former name DTZ) to inform the evidence base in support

of the land’s proposed employment allocation in the Site Allocations Plan of Leeds’ Local Plan.

The findings of this update reinforce the earlier conclusions which in summary are:

The Airport needs space to grow

Leeds is one of the largest city region economies in the UK, but has only the 15th largest

airport (in terms of passenger numbers). LBA is forecast to double its passenger numbers by

2030 and it requires space to grow in order to realise this growth.

The development of an Employment Hub comprising land including both the emerging

employment land allocation and land within Airport’s Operational Land Boundary (AOLB) is

regarded by LBA as an integral component of the growth strategy for the Airport. The hub will

support the Airport’s growth by:

Providing space for the expansion of core operational and supply chain activities;

Enhancing its profile and ‘investability’ particularly to flight operating companies for route

development; and

Strengthening the case for improved connections and accessibility.

There is an identified requirement for a large scale strategic allocation of employment

land at the airport

In our earlier report we highlighted the economic development need and opportunity as

demonstrated by:

The fact that all other major regional cities are bringing forward dedicated strategic

employment sites at airports to respond to the opportunity and demands of occupiers for

land and property in close proximity to airports. There needs to be a comparable offer at

Leeds Bradford Airport to enable the City Region to compete and to avoid the loss of

occupiers;

The location offers a differentiated product that will complement rather than compete with

other / emerging employment sites within Leeds; and

Arguably 1 ha of employment land at the airport has a greater economic development

value as measured in net GVA terms than other locations because of the distinct and

differentiated offer at the airport.

Since the production of our previous report in November 2014, the case has been

strengthened for a strategic employment land allocation as a result of:

The proposed allocation of the 36.2 ha site in the Draft Site Allocations Development Plan

Document as an Economic Hub;

Additional employment land evidence produced on behalf of Leeds City Council (BE Group

Assessment of Employment Land Needs for North West Leeds, June 2015), which

confirmed the local need for additional employment land allocations close to Leeds

Bradford Airport;

An employment land study dated October 2016 produced by Andy Haigh Associates on

behalf of Leeds City Region Local Economic Partnership which provided evidence in

support of a strategic employment land allocation at Leeds Bradford Airport; and

The identification of the Economic hub in the Leeds City Region Strategic Economic Plan

as a Strategic Employment Site.

LBA has published its Masterplan setting out how the Airport will grow including the spatial

implications.

The growth of Leeds Bradford Airport is recognised and supported nationally, regionally and

locally, as reflected in the Leeds City Region Enterprise Partnership’s (LEP’s) Strategic

Economic Plan, the Leeds Transport Strategy (2016) and the Draft Submission Site

Allocations DPD document of the Leeds Local Plan.

Public private collaboration can ensure the delivery of maximum benefits

Recent and ongoing consultations between Leeds Bradford Airport, Leeds City Council, Leeds

City Region LEP, West Yorkshire Combined Authority (WYCA) and HE institutions have

identified a number of opportunities which are being explored:

The potential for creating an Innovative Technology park to plug an identified gap in the

Leeds City Region Land and property offer, to align with the emerging manufacturing

strategy of the LEP / WYCA and University;

The creation of a manufacturing hub facility incorporating incubation and innovation

facilities as well as conference and training space; and

Creation of Enterprise Zone status to establish both an infrastructure funding mechanism

utilising business rates additionality for Tax Increment Financing (TIF) together with

occupier incentives geared towards manufacturing firms.

1 Introduction

Purpose

Cushman and Wakefield has been appointed by Leeds Bradford Airport (LBA) to assess and

develop its proposals for an ‘Employment Hub’ comprising a mix of predominantly

employment uses on land to the north of the Airport. This report updates the previous report

produced by us in November 2014 under our former brand DTZ.

Passenger forecasts indicate that LBA is projected to grow significantly over the next 15

years and it aims to become a top 10 UK airport in terms of its passenger traffic. Alongside

this, a significant opportunity exists for the Airport to develop a complementary Employment

Hub of economic activity. LBA have control of land immediately to the north of the Airport

which is identified for the delivery of the Employment Hub.

The Airport’s current landside offer does not match the potential growth projections. Given

its growth projections, there is a distinct opportunity to capitalise upon the Airport ‘asset’ and

the attractiveness to businesses that an airport location would provide. This could provide a

unique employment location within the Leeds City Region that could increase its

attractiveness to inward investors and address the current lack of available large strategic

commercial development sites across the City Region.

This report has been prepared to update the evidence base in support of the proposed

Employment Hub to inform the forthcoming Examination of the Draft Site Allocations

Development Plan Document of the Leeds Local Plan and emerging allocation EG3 ‘Leeds

Bradford International Airport (LBIA – Employment Hub) of the DPD.

Methodology and structure of report

Our approach to this commission has involved an assessment of the various drivers that

influence the potential for a commercial growth hub at LBA:

Policy

Economic

Aviation

Commercial

We have then worked alongside WYG and 5plus Architects to devise an indicative land

development strategy, development schedule and phasing plan.

An evidenced-based approach has been adopted to ensure a robust assessment of the

potential for the hub, drawing on documented evidence of the market for commercial land

and floor space within the Leeds area and also reviewing lessons from other comparable

airports across the country. We have also consulted senior representatives from the

following organisations in the preparation of this report:

Leeds Bradford Airport

Leeds City Council

Leeds City Region Local Enterprise Partnership (LCR)

West Yorkshire Combined Authority (WYCA)

University of Leeds

This report first outlines the LBA baseline and growth context before assessing the various

growth drivers. It then outlines the development potential and makes recommendations on

the quantum and mix of development and means of delivery. It concludes by providing an

assessment of the economic benefits of the Economic Hub.

2 LBA Growth Context History

LBA is located approximately seven miles to the North West of Leeds City Centre. It opened

in 1931 as Yeadon Aerodrome. Domestic schedule flights commenced in 1935 and it served

an important role during World War II, with the development of an adjacent military aircraft

factory. By the 1950s the airport was running commercial flights to the Isle of Man, Liverpool,

Belfast, Jersey, Ostend, Southend, the Isle of Wight and Dusseldorf. In 1953 Yeadon

Aviation Ltd was set up to run the flying school and commercial airfield operation but the

ownership was transferred to five local councils in 1987 through a limited company with

Leeds and Bradford councils each owning 40% and Wakefield, Calderdale and Kirklees

sharing the remaining 20%.

Scheduled domestic and European flights re-commenced after the war and these expanded

rapidly during the later 1970s/80s as the popularity of package holidays boomed. It was

owned jointly by the five neighbouring local authority areas of Leeds, Bradford, Calderdale,

Kirklees and Wakefield until 2007, when it was announced that Bridgepoint Capital was the

preferred bidder, acquiring the asset for approximately £145million.

Bridgepoint Capital owns the airport outright but the 5 councils hold a 'special share' interest

in the airport, to protect the name and continued operation as the major air transport gateway

for Yorkshire. The Airport has had a masterplan in place since 2004/05, and Bridgepoint

submitted a planning application for a £28m investment programme in late 2008 which was

approved in 2009, although the focus of this has principally upon the airside operations to

date. The airport had already seen significant improvements made prior to the Bridgepoint

acquisition including a significantly enlarged terminal building, a £5m food court

refurbishment in 2006 and an £8m development on the south end of the airport with two new

hangars, maintenance facilities and executive aviation terminal.

In March 2017, the Airport published an updated masterplan/strategic development plan

(SDP) entitled ‘Route to 2030’. This identifies a vision to be an ‘outstanding regional

airport, connecting Yorkshire with the world’. The SDP provides an update on

investment and growth at LBA since 2005 and sets out a high level strategy for the

development of the airport through to 2030. Underpinning the SDP is a clear

understanding of the role of the airport in the Leeds City Region (LCR). It reports that LBA

contributes £336m to the local economy every year and delivers over 2,350 direct

jobs, with considerably more relying indirectly on the success of the airport. The SDP

suggests that LBA has in recent years, outstripped the percentage growth of many other UK

airports. It exceeded 3.6 million passengers per annum (mppa) in 2016/17 representing a

27% increase in numbers since 2005.

Current flight operators

There are 16 airlines and tour operators operating from LBA as listed below:

16 Leading Airlines & Tour Operators

o Jet.com o Ryanair o Thomas Cook o Monarch o KLM o Aer Lingus o Super Break o Balkan Holidays o Jet2CityBreaks o flybe o Thomson o Eastern Airways o First Choice o Jet2Holidays o Aurigny o British Airways

The Airport is committed to both working with its existing airlines to expand the available

routes and also to exploring opportunities to secure new flight operating companies. The

Airport has recently announced that from February it will become one of the first airports

nationally to fly direct to Akureyri in Northern Iceland, just 60km from the Arctic Circle. For

the Summer 2017 season, Jet2.com introduced new routes to locations such as Berlin,

Halkidiki, Naples, Almeria and Girona in addition to Ryanair’s new routes to Warsaw, Gran

Canaria, Vilnius and Bratislava.

Flight routes/destinations

The airport offers direct flights to over 75 destinations across the UK and around the world,

with connections on to significantly more through the hub airports of London Heathrow,

Amsterdam and also Dublin (for flights to the USA). The direct British Airways flight to

Heathrow is key to providing onward flights to the rest of the world, to over 150 destinations.

Direct flights are largely European-based, although Jet2 does offer direct flights to New York

around Christmas. Current key destinations include France, Germany, Italy, Austria,

Switzerland and Spain, amongst others. It serves both holiday and business destinations

with varying summer and winter timetables.

Ownership and management of LBA

The Airport is 100% owned by Bridgepoint Capital, an international private equity group,

which acquired the Airport for €214m (£145m) in 2007. Bridgepoint invested £27m to acquire

a 24% stake in Birmingham Airport in 1997, disposing of its interest four years later for £84m.

It therefore has experience in the aviation sector. As stated, the 5 councils hold a 'special

share' interest in the airport to ensure that it remains as an operational airport for the

Yorkshire region. The Airport is operated by Leeds Bradford Airport Limited.

Numbers of flights and passengers

In 2016, 3.6m passengers travelled through LBA, representing 1.4% of all air passenger

traffic across the UK (excluding the Channel Islands). This placed LBA as the 15th largest

airport nationally in terms of passenger numbers, closely behind London City and East

Midlands (see table below). Heathrow, Gatwick and Manchester were the three largest

airports in terms of passenger traffic, home to 53% of all passenger traffic nationally. LBA

experienced a 16% increase in passenger numbers between 2008 and 2013, representing

the largest increase of all major national and regional airports across the UK, based on Civil

Aviation Authority (CAA) data.

There were a total of 45,627 aircraft movements at LBA in 2013, ranking it 20th across UK

airports (see Table 2.1 below).

Table 2.1: passenger and aircraft movements (2016 CAA data)

Freight Movements

Freight currently represents a relatively small part of the overall business of LBA however

there is the potential for growth. There is considered to be the potential to significantly

enhance the freight and cargo operations at LBA, particularly in relation to ‘belly cargo’ on

direct flights to locations such as London Heathrow where there is significant capacity for

this.

Economic output

Based on an economic impact report undertaken by independent consultants (York Aviation)

in 2015, the Airport currently contributes in excess of £100m of direct GVA per annum to the

Leeds City Region economy and directly employs over 2,300 people, making it one of the

largest employers in the City Region. With indirect economic benefits as well (i.e. business

connectivity/productivity), its overall impact within the LCR was estimated to be £336m per

annum. Numerous businesses are based within the airport site and it supports local

employment with over 80% of its employees residing within a 10 mile radius (based on

information provided by LBA). It is a major economic asset which provides significant direct

and indirect economic benefits to the City Region and beyond.

Current commercial accommodation within the airport boundary

There is currently 29,000 sq m (GIA) of operational built floorspace within the Airport

boundary (based on 2010 LBA Rating Schedule). Approximately 22,000 sq m (GIA) of this

relates to the main terminal building, which was constructed in 1993 and then extended

since, albeit partly through temporary floorspace. Other key buildings on the site include:

Table 2.1: Accommodation on site

Building Floorspace (sqm) (GIA)

Fire-station 979

Control Tower/Centres 401

Engineering Offices 752

Catering Centre 1,179

Freight Offices 308

Repair Garages 678

Airedale House 376

Electricians Store 137

Transit Sheds 1,081

Fuel Store Offices/Maintenance 166

Boiler House/Substation 137

Aero House Rooms 90

Source: 2010 rating list

A large proportion of the site is occupied, as one would expect, by runways, aprons and

taxiways as well as access roads and car parking. The main terminal itself includes the

following facilities/uses in addition to standard waiting areas, check-in desks and LBA’s

offices:

World Duty Free

CARGO

WH Smith

Boots

Travelex

Burger King

Saltaire Bar/Eatery

Camden Food Company

Home Bar

Cafe Ritazza

Fat Face

Leeds Rhinos RLFC shop

Leeds United FC shop

Yorkshire County Cricket Club shop

Yorkshire Premier Lounge

A plan illustrating the spatial extent of the current airport operational area is presented

below (shaded in turquoise):

Figure 2.4: Leeds Bradford Airport

Growth Plans

The Airport has grown significantly over recent years in terms of passenger numbers and

this growth scenario is set to continue. By 2030, the Airport is projecting 7.1m passengers

per annum, approximately doubling current passenger numbers. It has the potential to

become the largest airport (in terms of passenger numbers) east of the Pennines from

Newcastle in the north to East Midlands in the south and to become a top 10 airport

nationally. It is seeking to target route development to support priority economic sectors and

to reduce the current levels of passenger movement leakage. Its aim as per this latest SDP

is to an ‘outstanding regional airport, connecting Yorkshire with the world’. Its objective is to

develop a successful airport that fully serves the business and leisure needs of the Yorkshire

region and acts as a catalyst for economic growth by:

Developing a focused route development programme;

Developing high quality airside and landside facilities; and

Developing high quality surface access connectivity.

The Airport is seeking to capitalise upon the growth opportunity that it has and to create a

sense of place/destination in its own right at the airport. If it is to achieve this and realise its

growth ambitions, there is a distinct need for additional operational and non-operational land

and premises.

3 LBA Growth Drivers: Policy

Aviation Policy Framework (2013)

The 2013 Aviation Policy Framework replaced the 2003 Air Transport White Paper as

Government’s policy on the aviation sector. This acknowledges that the sector contributes

around £18 billion per annum of economic output to the UK economy and employs around

220,000 employees directly.

The Government’s primary objective as defined within this policy framework is to achieve

long-term economic growth. It recognises that airports are in some ways cities in themselves,

creating local jobs and generating opportunities for economic rebalancing in their wider area

and fully recognises the vital contribution they can make to the growth of regional economies.

The document suggests that many airports act as focal points for business development and

employment. The focus is on London’s airports as the largest carriers of passengers,

however it identifies that the number of passengers using non-London airports has increased

by over a third since 2000.

The Framework identifies that LBA is a “vital contributor to the economy of the Yorkshire

and Humber region, and in particular the Leeds City region”. It suggests that the services

of the airport and international connectivity will continue to contribute towards improved

export activity, performance and business competitiveness. Based on forecast passenger

growth at the airport, it is estimated that this will grow to around 8,000 jobs and £290 million

GVA by 2030.

The Policy Framework recognises that the scope exists for LEPs to develop local strategies

to maximise the catalytic effects of airports to attract business and support growth. It

suggests that LEPs, in partnership with local authorities, have a range of tools at their

disposal to help support businesses in the vicinity of airports and that the Government

encourages airport operators to engage actively with their LEPs to ensure that they are fully

integrated into their LEPs’ overall economic strategy for the area, and to maximise the

benefits to local economies.

The Policy Framework also underlines that nationally a number of Enterprise Zones have

been designated around regional airports to support their growth. Examples include

Manchester’s Airport City (£600m, 150-acre development which will transform the airport into

an international business destination) and the Newquay ‘Aerohub’ (55ha, including aviation

related space and more generic commercial employment land). The Enterprise Zone in

Cardiff has also been expanded to incorporate the airport.

Leeds City Region Strategic Economic Plan

The Leeds City Region Strategic Economic Plan (SEP) 2016 represents the economic policy

document that guides economic development needs across Leeds City Region. This

acknowledges that the Leeds City Region is the largest City Region outside of London and

that despite its economic strengths and assets, it is not realising its full potential. Its vision is

“to unlock the potential of the City Region, developing an economic powerhouse that will

create jobs and prosperity”. The SEP sets out a vision to

TO BE A GLOBALLY RECOGNISED ECONOMY WHERE GOOD GROWTH DELIVERS

HIGH LEVELS OF PROSPERITY, JOBS AND QUALITY OF LIFE FOR EVERYONE

The SEP identifies 4 strategic investment priorities:

1) Supporting growing businesses

2) Developing a skilled and flexible workforce

3) Clean Energy and Environmental Resilience

4) Delivering the infrastructure for growth.

The SEP identifies a number of key growth sectors where it recognises existing clusters of

particular expertise and opportunity:

Innovative manufacturing

Financial & professional services

Health & life sciences

Low carbon & environmental industries

Digital & creative industries

Transport, Food & drink.

The SEP recognises that the “transformation of the City Region’s local, national and

international transport connectivity is central to its plans for growth”. It acknowledges that

good international connectivity plays an increasingly important part in promoting trade and

attracting inward investment. The SEP identifies that “the City Region benefits from a

growing regional airport, which is one of the fastest growing nationally”. It recognises that it

has “the potential to deliver much improved international connectivity, benefitting existing

businesses and attracting inward investment in our key priority sectors”. The SEP also

makes reference to the fact that an improved surface connectivity is a priority and that a

better connected airport will help to support the LEP’s key sectors and attract more inward

investment. A plan illustrating the SEP’s spatial priorities is included within the document

which clearly identifies the Employment Hub as a key strategic employment site.

The SEP identifies the proposed Employment Hub as Leeds Bradford Airport Employment

Zone acknowledging the potential of the airport to deliver substantial jobs growth.

Consultation with Leeds City Region LEP and WYCA has further reinforced the appetite of

the public sector to realise the delivery of the Employment Hub at the Airport. As part of the

refresh of the forthcoming SEP, WYCA are proposing to develop an Industrial Strategy for

the City Region putting manufacturing at its heart. It sees the proposed hub as a key

opportunity to deliver land and property to drive growth in innovative manufacturing.

Discussions with WYCA have also included support for the concept of an innovation centre

to stimulate advanced and innovative manufacturing on site.

Leeds Local Plan

The adopted Core Strategy Development Plan Document recognises that LBA is a “major

part of the strategic Infrastructure for the City Region and that it is also an economic

resource for employment, business development and tourism”. It acknowledges that

the airport’s economic benefits stem beyond just the Airport site across the wider City Region

and that there is potential for growth in terms of passenger numbers and freight. The Core

Strategy also acknowledges that there is ongoing work currently being undertaken by the

Airport to define its longer term aspirations, as part of the Airport’s Masterplan. This

Masterplan was published in March 2017.

Core Strategy Spatial Policy 9 identifies the need for 493 ha of land for general industrial

uses to be allocated across the District. Following a thorough review of site options, Leeds

Council identified the need for 36.2 ha of land forming the proposed Employment Hub as a

key allocation to meet this need, as set out in the Site Allocations DPD.

The Core Strategy recognises that the Airport provide key components of strategic

infrastructure, for businesses, residents and visitors and that it provides a ‘gateway’ to the

City Region as a whole. Spatial Policy 12 within the Core Strategy is entitled ‘Managing the

growth of Leeds Bradford Airport’ and suggests that the continued development of Leeds

Bradford Airport will be supported to enable it to fulfil its role as an important regional airport

subject to a number of points, particularly relating to the much needed surface access

improvements.

Growth implications for LBA LBA’s growth is embedded in national aviation policy which also recognises the importance

of growing the mix of commercial operations around airports to reinforce their growth

potential. It is important that local policies – through both planning and economic

development – respond to accommodate the needs of the airport’s expansion.

The Local Enterprise Partnership’s vision to accelerate economic growth of the Leeds City

Region requires a strong airport with international routes. It also requires a diverse, high

quality range of commercial land and property to accommodate its growth needs, including

premises and sites for high value operations that are innovation and technology related – an

area of property in which Leeds punches well below its weight. LBA Employment Hub can

play a key role in this regard by offering a unique selling point that will appeal to occupiers

seeking high profile and well connected locations.

The additional powers and resources being committed to LEPs provides public and private

sector partners with the ability to be innovative in the way that it can support and facilitate

the delivery of economic development projects such as the Employment Hub. Therefore

there is an opportunity for LBA to work collaboratively with the LEP and other partners to

deliver the vision for an Employment Hub.

4 LBA Growth Drivers: Economic

This section presents an analysis of the current economic position and performance of the

Leeds City Region economy. It draws upon a number of published secondary data sources

to provide an overview of the local economy as context for the growth ambitions of the

Airport, located at the geographic heart of the City Region. Data has been used to show

how the Leeds City Region performs against regional and national benchmarks to enable

comparison, largely based on data extracted from the NOMIS database, drawing on ONS

and other key data sources.

The Leeds City Region (LCR) comprises ten local authority areas including Leeds, Bradford,

York, Kirklees, Barnsley, Wakefield, Selby, Calderdale, Harrogate and Craven. The City

Region’s economy is worth £54bn per annum (5% of the national Gross Domestic Product).

The LCR is widely regarded as the largest financial and legal centre outside of London and

the City Region claims to have more company HQ’s than any other LEP area in the north of

England. The City Region markets itself on the fact that it is home to world leading companies

and universities, as well as some of the most beautiful physical landscapes in the country –

it comprises a diverse mix of urban and rural land uses.

Population and demographic trends

The most recent Office of National Statistics (ONS) Population Estimates indicate that 3.05

million people were resident within the Leeds City Region in 2016. The population of the

Leeds City Region represents over half (56.1%) of the Yorkshire and Humber Region’s total

resident population (5.42 million people).

Between 1995 and 2016, the population of the Leeds City Region increased by 11.4%, a

higher rate of growth than the wider regional Yorkshire and Humber rate of 9.4% but lower

than the national rate of 14.2% (ONS, via Nomis).

Working Age Population and Projected Growth

The 2016 ONS Population Estimates indicate that 1.91 million people of working age (16-

64) reside within the Leeds City Region, representing 63% of the total resident population.

This is broadly aligned with regional and national average percentages.

At the national level, working age population growth of 3.5% is anticipated over the decade

to 2030. A lower growth rate of 1.7% is projected at the Leeds City Region level, which

exceeds the 0.1% anticipated across the wider Yorkshire and Humber region (2016 based

ONS population projections.)

Economic Activity

It is not just the size of the working age population that determines the scale of the local

labour market, but the extent to which the working age population is economically active.

Economic activity is defined as those in employment (or self-employment) or those that are

unemployed but available for work. The economic activity rate represents the extent to which

the working-age population is engaged with the labour market and indicates the absolute

scale of the labour force from which organisations can source employment. Limits to the

size of the resident labour force result in in-commuting and/or inhibit economic growth.

Economic activity rates within the Leeds City Region broadly are currently at 77% of the

working age population which slightly exceeds the wider Yorkshire and Humber rate of 76%

but is lower than the national rate of 78% (based on 2017 Annual Population Survey).

Occupation

The occupational structure and characteristics of a City Region’s resident labour market is

central to its overall competitiveness and shapes the economic opportunities that residents

are able to access. In turn, the type of skills implied by an area’s occupational structure can

shape the economy’s ability to attract and support higher-value economic activity and attract

higher skilled non-resident workers into the economy.

Figure 4.1 illustrates the resident occupational structure of the Leeds City Region, compared

with wider regional and national benchmarks. This illustrates that 42.1% of employees within

the Leeds City Region are employed in the top three occupational groups This is higher than

the Yorkshire & Humber (40.5%) averages but lower than the 45.8% national rate.

Figure 4.1: Occupational structure of those in Employment 2017

Source: Annual Population Survey 2017

Qualifications

Central to the long-term growth capacity and productivity of any economy and the ability of

the City Region to improve its occupational structure are the skill levels and educational

attainment of the resident labour market.

At 10.1% of the working age population, the Leeds City Region has a higher than average

proportion of people with no formal qualifications compared to the national average of 7.8%

and the regional average of 9.5%. This implies the need for enhanced skills development

within the City Region to drive economic competitiveness. 31.3% of the LCR’s working age

population are qualified to NVQ 4+ (degree level or above) which is in line with the regional

figure but much lower than the national average of 37.9%, suggesting the need for a focus

on higher level skills attainment (based on 2016 Annual Population Survey).

Business Births and Survival Rates

The volume of business start-ups (births) and survival rates are commonly used as proxies

for levels of entrepreneurship. The Leeds City Region experienced a growth in business

stocks (0.9% in 2011 and 0.3% in 2012) above that of the regional Yorkshire and Humber

rates (0.4% in 2011 and -0.1% in 2012). This growth was, however, below the national growth

rates of 1.4% and 0.7% respectively.

The below table indicates that there were 11,570 new business births within the Leeds City

Region in 2007. In terms of business survival rates between 2007-12, the year 1 survival rate

of businesses within the Leeds City Region was 95.6% in year 1, which was higher than

regional and national averages. At year 5, it was 42.8%, which was higher than the regional

average but lower than the national average.

Table 4.1: Five Year Business Survival Rates (2007-2012)

Busine

ss

Births

(2007)

Survival Rates

1 Year 2

Years

3

Years

4

Years

5

Years

Leeds City Region 11,570 95.6 78.8 60.9 50.0 42.8

Yorkshire and

Humber

20,385 94.4 78.2 60.1 49.1 41.9

Great Britain 274,770 95.4 81.2 63.0 52.0 44.6

Source: ONS Business Demographics 2012

Employment Sectors

An analysis has been undertaken of a number of key employment sectors within the Leeds

City Region, compared with the national picture. This identifies that there are a higher

proportion of the workforce employed in the following sectors in the Leeds City Region

compared with England as a whole:

Manufacturing (10.5% compared with 8.1% nationally)

Education (10.1% compared with 9.2% nationally)

Health (13.4% compared with 12.8% nationally)

Business administration (10.2% compared with 9.1% nationally)

(Source: BRES, 2015)

A report recently produced for the Leeds City Region Secretariat by Ekosgen (February

2014) has examined the sector strengths of the local economy. It reviewed the level of

specialisation and growth across all standard economic sectors to identify recommended

priorities for the Leeds City Region to invest in. The report concludes that the following

sectors should be prioritised by the Leeds City Region for development and investment:

Financial, professional and business services

Advanced manufacturing

Health and bio-science

Creative and digital industries

Food and drink

Low carbon industries

Table 4.2 below illustrates the various sector strengths which include significant strengths in

a number of sectors which have international markets and a research and development

focus.

Table 4.2: Leeds City Region Sector Strengths

Source: Key Sectors Policy for Leeds City Region Draft report by Ekosgen February

2014

The LCR LEP published its 2016 Economic Assessment in 2016. This identified the following

in relation to the LEP’s key sector and cluster strengths:

Heart of the UK’s advanced manufacturing and engineering industry

The UK’s largest centre for financial, professional and business services outside London

A strong low carbon sector and energy generation capacity

High quality life sciences and related industries, particularly biosciences and

healthcare/medical technologies

Leading digital technology companies

A diverse food & drink sector

A network of strong local clusters in the creative and cultural industries; and a strong

tourism/leisure/cultural sector

Exporting Potential Inward investment

potential

Research Strengths National Innovation

Priorities

Financial services

High-tech goods

Communication

Construction services

Education

Financial services

intelligence

Health innovation

Advanced digital

technologies

Powertrain & precision

engineering

De-carbonised energy

and renewables

Agri-science

Advanced materials

Big Data

Regenerative medicine

Robotics

Satellites

Bio-science

Advanced materials

ICT

Healthcare

Energy

High value

manufacturing

Leeds City Region Sector Performance

Employment (numbers) Employment (specialism) Gross Value Added

Education

Retail

Health

Public administration

Food and beverage service

Manufacture of textiles

Manufacture of beverages

Water collection, treatment and supply

Manufacture of furniture

Printing / recorded media

Wholesale

Retail

Electricity, gas etc

Specialised construction

Manufacture of food

Employment Growth (%) Productivity GVA Growth

Professional services

Computing and information

Administrative and support

services

Land transport

Media activities

Electricity, gas etc

Air transport

Rental and leasing

Telecommunications

Manufacture of basic pharmaceuticals

Finance

Real estate

Retail

Wholesale

Professional services

An attractive location for the logistics industry at the heart of UK rail and motorway

networks.

The Economic Assessment specifically identifies LBA as a key asset for improving economic

performance, suggesting that continued passenger growth alongside the proposed

employment zone that could support thousands of new jobs.

Summary of the economic challenges/opportunity

The above identifies the following economic challenges/opportunities across the Leeds City

Region which the proposed Employment Hub could address/capitalise on as a critical

economic asset, building upon the existing profile and operations of the Airport itself:

A significant and growing population, particularly of working age

Need to drive a shift towards a higher value occupational profile through the provision of

high value employment opportunities

Linked to the above, a need to promote skills and qualification attainment, particularly at

the higher end (NVQ3/4+)

Need to support new business start-ups, innovation and enterprise to drive economic

growth

Key economic growth opportunities in sectors such as health/life sciences, low carbon,

digital and advanced/innovative engineering/manufacturing. The LCR has a competitive

advantage in a number of these sectors.

Education

The LCR is home to 9 Higher Education institutions (universities) and 14 Further Education

Colleges, accommodating a total student population of around 230,000. Universities include

the University of Leeds, University of York, Leeds Metropolitan University, University of

Huddersfield, Leeds Trinity University, University of Bradford and University of York St John

(HE offer also includes Leeds College of Art and Leeds College of Music). In total, these

produce in the region of 40,000 graduates every year. The Universities of Leeds and York

are members of the White Rose University Consortium, which together rank alongside

Oxford and Cambridge in terms of research capabilities.

The below table presents the rankings of each of the universities based on 3 recent nationally

recognised assessments – there are 120 universities nationally and the lower the ranking

the better. The assessments are based upon a wide range of criteria from academic and

research and research performance through to student experience. As can be seen from

this, both the University of York and the University of Leeds are ranked within the top 25%

nationally.

Table 4.3: University rankings

Complete University

Guide 2017

Times UK rank 2017 Guardian UK rank

2017

University of

Leeds

14 20 17

University of York 20 18 14

University of

Huddersfield

72 64 60

York St John’s 122 119

University of

Bradford

58 64 75

Leeds Trinity 112 114

Leeds Beckett 121 64 111

Leeds University has for some years been ranked second nationally in terms of the number

of student applications it receives. It was also ranked in the top 10 nationally in the 2008

Research Assessment Exercise in terms of the quality of its research.

It operates 8 faculties including Arts, Biological Sciences, Business, Education, Social

Sciences and Law, Engineering, Environment, Mathematics and Physical Sciences,

Medicine and Health. Its Biological Science Faculty is home to over 2,400 students and has

a £53m research portfolio. In the last government Research Assessment Exercise (RAE)

2008, the University was ranked 4th for biological sciences in the UK. Its Faculty of Medicine

and Health also hosts the Biomedical and Health Research Centre (BHRC) - a strategic

partnership between the four science Faculties of the University of Leeds and the Leeds

Teaching Hospital NHS Trust and Collaborative Research Centres in Epidemiology and

Biostats, Cardiovascular Disease, Musculoskeletal Disease and Obesity, Nutrition and

Heath.

Leeds Teaching Hospitals NHS Trust is the largest in the UK, treating over a million patients

a year with a budget of £789 million and a workforce of over 14,000. St James’s University

Hospital, part of the Trust, is the largest teaching hospital in Europe. It houses the landmark

£220 million Yorkshire Cancer Centre, opened in 2008, the largest of its kind in Europe. The

City Region also comprises the York Biocentre, the Bioincubator at Leeds Innovation Centre

and Bradford Bioincubator, which together provide 9% of all dedicated bioincubator space in

the UK.

The University of York was ranked as the 8th best research institution in the UK (RAE, 2008)

and is home to 16,000 students.

We previously engaged with all 3 Leeds-based universities as part of this work to understand

more about their academic and research strengths and have recently re-engaged with the

University of Leeds. The University of Leeds has strengths in several key sectors which are

being targeted in respect of innovation:

http://www.leedsteachinghospitals.com/

Health / bio science

Water

Energy

Future Cities

Food

Culture

High Speed Rail Engineering (new department)

The University has expressed the view that there is an inadequate supply of sites and

premises in Leeds to accommodate research and development businesses emerging from

its campus, and that as a result there has been a leakage of occupiers to other cities/city

regions. The University currently generates around 50 business start-ups/spin outs per

annum. The University is underway with the development of Nexus, a £40m new innovation

facility on its campus site off Woodhouse Lane in Leeds. This will accommodate around 60

new high growth businesses in a mix of laboratory and office space and is due to reach

practical completion in September 2018. It will focus on a range of high value sectors across

health/life sciences, engineering and environmental technologies, with a distinct focus on

data. The University is already exploring potential grow on facilities and manufacturing space

for businesses that could stem from this. Even with the completion of Nexus, there is reported

by the University to be a continued lack of laboratory grow on space within the City and no

physical space on the University campus to accommodate this. The proposed Employment

Hub could provide this type of space in an environment which could be highly attractive to

prospective occupiers.

Leeds Beckett University has a number of sector strengths in sport, business, law, finance,

music and the arts. Together with Leeds Trinity University, there could be opportunities for

off campus innovation facilities in a high profile airport business park location.

Growth implications for LBA

The LCR is one of the highest performing regional economies in terms of labour market

performance and growth. Its position as the largest city regional economy outside of London

contrasts unfavourably with the airport’s status as 15th biggest airport; the growth of the

economy in the future will drive the potential for growth of the airport and vice versa.

Of particular significance to the Airport Employment Hub vision is the fact that the city region

has strengths in a number of economic sectors which will drive demand for commercial land

and floor space and present opportunities for the hub. Key growth sectors include

professional/financial services, advanced manufacturing, health and bio-science, creative

and digital industries, food and drink and low carbon industries. Many of these sectors will

benefit from high profile well connected locations such as the Airport where being at the ‘front

door’ to the city region assists connections with suppliers, parent companies, and clients.

Evidence from UK and abroad demonstrates there to be a healthy appetite from occupiers

to locate close to airports.

Our analysis of the R&D sector reveals a particular opportunity for more land and premises

to meet demand. The University of Leeds has confirmed the leakage of many of the

businesses that emerge from campus as a result of a lack of suitable premises. LBA can

offer a unique location for accommodating this potential demand.

5 LBA Growth Drivers: Aviation Demand for commercial land and premises

The airport is projecting an increase in its passenger numbers from 3.6m passengers per

annum at present to 7.1m passengers per annum by 2030. This significant growth in

passenger numbers will require the airport to expand its footprint and will drive demand for

additional land and premises across three key areas:

Core operational requirements – to meet the growth ambitions, there will be a need to

increase the capacity of the passenger terminal and other associated operational

facilities such as aprons, taxiways, hangars, baggage handling, fuel stores and

maintenance facilities. As a result there will be an additional demand for land and floor

space displaced due to the expansion of the airport

Non-operational ancillary commercial land/floorspace requirements – there will be

a need for additional land and floorspace for additional/expanded flight operating

companies (crew facilities/office space/maintenance facilities), catering organisations,

ground handling facilities (e.g. Swissport) and others such as flight training/skills

development facilities (i.e. the Aviation Academy/Multiflight etc). There is an opportunity

for the Airport to develop its freight/cargo operations which would have implications for

the need for additional cargo/freight handling facilities, transit sheds and distribution

facilities.

Supply chain related requirements (aviation businesses / occupiers) – as the airport

expands there is the potential for it to attract occupiers in the aviation sector which have

a preference to be located in close proximity to the airport. These may include for

example, aircraft component manufacturing/supply businesses, freight forwarders, which

typically seek to locate adjacent to airports.

Benchmarking comparable airports

In our 2014 report, we undertook a comprehensive review of a number of comparable

regional airports elsewhere across the UK to understand more about the extent of their

spatial footprint and the extent to which they have either current or planned commercial

floorspace either within or in close proximity to the airport boundary. We have undertaken an

update of this as per table 5.2 below. In summary, key comparable UK regional airports

include the following:

Newcastle Airport – accommodates 7,000 sq m Freight Village (with expansion land)

and the Airport Industrial Estate is located 3 miles from the Airport, comprising c.18,000

sq m of light industrial floorspace. There are 7 hotels within a 2.5 mile radius of airport.

Liverpool John Lennon Airport - TNT distribution facility on a 1.6 ha (4 acre) site to the

east of terminal. An expanded cargo and maintenance facility is planned adjacent to the

airport of around 7 ha. Liverpool International Business Park is a 157 acre (62 hectare)

site situated adjacent to Liverpool John Lennon Airport. Planning consent has been

granted for B1/B2/B8 uses on the site and buildings ranging from 50,000 sq. ft. (4,645

sq. m.) to 500,000 sq. ft. (46,452 sq. m.) can be accommodated. 35 acres of development

land is currently being marketed. Estimated to be circa 340,000 sq m (3.5 million sq ft) of

mixed office, industrial, warehousing and commercial leisure accommodation within 2 km

(1.2 miles) of JLA when these sites are fully built out (including existing local employment

sites). 4 hotels immediately adjacent to airport.

Bournemouth Airport - the Aviation Park is adjacent to the Airport, comprising a mix of

technology, industry and freight uses across 80 hectares (200 acres) of land and

buildings allocated for employment use. It provides approximately 150,000 sq m of

business space being developed by the owners of the airport. There are plans to develop

a further 50,000 sq m of employment space on this site (outline consent secured).

East Midlands Airport – home to 17,000 sq m of cargo floorspace and a further 66,000

sq m of commercial floorspace owned by the Airport on site. The Pegasus Business Park

is located adjacent to the Airport and comprises 26 ha of land (10 ha remain

undeveloped) and a total of 20,000 sq m of B1 floor space. Plans to bring forward the

remaining 10ha at Pegasus for office, logistics, general warehousing and hotel uses.

Land to the south of the Pegasus Business Park, has been identified as potential

employment land. Land has also been reserved for the further development of the DHL

Hub building at Cargo West and land will also be safeguarded for a second major

integrator hub in Cargo East. Plans are also being developed to deliver a rail freight

terminal capable of providing up to 600,000 sq m of B8 floorspace. 4 hotels immediately

adjacent to airport

Aberdeen Airport - Existing cargo facilities on the airport site occupy 2,400 sq m of

floorspace. Adjacent to the Airport are two well established industrial estates with a

number of large oil/gas company occupiers. Also adjacent to the Airport is the 54 acre

ABZ Business Park, with outline planning consent for a mix of office, industrial and hotel

uses. Also in close proximity to the Airport is the D2 Business Park with outline planning

consent for 100,000 sq m of office/industrial/ancillary employment uses. Adjacent to this

is additional land allocated for employment or HE/research use. 6 hotels within close

proximity of the airport

In summary, it is evident that all 5 of these comparator airports have either an established or

pipeline supply of employment land adjacent to their operational boundaries as well as

cargo/freight handling facilities within the airport boundaries. In terms of adjacent commercial

employment land, Bournemouth has an 80 ha employment site, Liverpool a 62 ha site,

Newcastle a 50 ha site, East Midlands a 26 ha site and Aberdeen a 22 ha site. These are all

dedicated business parks that are being developed and marketed on the back of their

proximity to the airport assets.

Table 5.2 Summary of benchmark airports across the UK

Airport Passenger

Numbers

(million)

Cargo Movements

(tonnes)

Airport

Operation

al Area

Existing employment uses

within/adjacent to Airport

Planned/pipeline employment uses

within/adjacent to Airport

2016 Projecte

d (2030)

2016 Projecte

d (2030)

Newcastle 4.81 8.50 4,574 Growth

planned

374 ha 7 hotels within 2.5 mile radius

Freight Village – 7,000 sqm

Airport Industrial Estate (3 miles from

the Airport).

Newcastle International Airport Business

Park – 50 hectares owned by the Airport –

up to 1m sqft of commercial development

(allocated in emerging Local Plan).

Designated Enterprise Zone site. Phase 1

for 16,257 sq m (175,000 sqft) of B1 Grade

A floorspace has outline planning consent.

Marketing currently on hold.

Freight Village expansion land

East

Midlands

4.65 10.0

(2040)

300,10

1

(excludi

ng

mail)

618,000

tonnes

(2035)

and

700,000

tonnes

(2040)

(excludin

g mail)

445 ha 17,094sqm (184,000sqft) cargo

floorspace

Further 66,000 sqm of commercial

floorspace owned by airport let on

ground leases. Over 100 tenants in

total at Airport

Pegasus Business Park - in the south

west corner of the airport site. 26

hectares, of which 10 remain

undeveloped. Existing development

includes 25,000 sqft Regus building,

PWC Office, National Grid

4 hotels

East Midlands Gateway Strategic Rail

Freight Interchange – a scheme is already

underway to deliver a rail freight terminal

capable of providing up to 6m sqft of B8

floorspace (development consent granted

by the Secretary of State in January 2016

and enabling works are underway)

Pegasus Business Park has an extant

planning consent for business park

development including hotels and

conference centres – 10 hectares to be

developed. Commercial development

proposals associated with the airport will be

brought forward for sites within the Pegasus

Business Park. These uses will include

offices, logistics, general warehousing and

hotels.

Land to the south of the Pegasus Business

Park, has been identified as potential

employment land

Liverpool 4.78 12.3

(2030)

270 220,000

tonnes

(2030)

186 ha TNT invested £6 million in the

provision of a new large distribution

facility on a 1.6 ha (4 acre) site to the

east of terminal.

Hotels - Crown Plaza, Hampton by

Hilton (on site), Holiday Inn Express,

Premier Inn

An expanded cargo and maintenance

facility is planned adjacent to the airport of

around 7 ha to handle forecast growth of

cargo to around 40,000 tonnes pa

Liverpool International Business Park is a

157 acre (62 hectare) site situated adjacent

to Liverpool John Lennon Airport. It is being

delivered by the Peel Group. Planning

consent has been granted for B1/B2/B8

uses on the site and buildings ranging from

50,000 sq. ft. (4,645 sq. m.) to 500,000 sq.

ft. (46,452 sq. m.) can be accommodated.

Current occupiers include B&M and

Prinovis. 40 acres of development land is

currently being marketed.

Aberdeen 2.96 5.1

(2040)

5,731

(excludi

gn

mail)

9,200

(2040)

215 Existing cargo facilities occupy

approximately 0.8 hectares of land,

including 1,600 sqm of warehousing.

DHL also have an 800 sqm cargo

facility to the south of the main

terminal.

Existing hotels include a Thistle Hotel,

Premier Inn, Courtyard by Marriott and

Speedbird Inn, all on the airport site.

Additional developments at ABZ Business

Park as opposite

D2 Business Park – outline planning

consent for 1.4m sqft of

office/industrial/ancillary employment uses

adjacent to the Airport. Existing occupiers

include BP (125,000 sqft), Emerson, ASCO

and Hampton by Hilton. 40 acres were sold

to Aker ASA to develop a new 390,000 sq.ft.

Adjacent to it is the Menzies Dyce

Hotel (209 rooms) and the Aberdeen

Air Hotel.

Adjacent to the Airport is the Kirkhill

Industrial Estate to the west and

Wellheads Industrial Estate to the

east. These are both well-established

industrial estates with a number of

major oil/gas company occupiers

Also adjacent to the Airport is the 54

acre ABZ Business Park.

HQ for Aker Solutions with expansion land.

20 acres of development land remains.

Bournemo

uth

0.67 4.5

(2030)

Data

not

availabl

e

Assumes

current

level

maintain

ed

366 ha The Aviation Park is adjacent to the

Airport, comprising a mix of

technology, industry and freight uses

across 80 hectares (200 acres) of land

and buildings allocated for

employment use. It provides c.1.6m sq

ft of business space, supports over

200 businesses and around 2,500

jobs. It comprises offices, industrial

units, distribution, hangars and

workshop sites, with a mix of both

aviation and non-aviation related

occupiers, which are generally

attracted by the prestige of being

based at the airport. It is owned and

operated by the Manchester Airport

Group, the owners of the Airport. It

includes a Basepoint Business Centre.

In 2012, MAG Developments unveiled a

ten-year masterplan vision for the

development of 540,000 sqft of new

business space – including offices,

industrial units, warehousing and

distribution facilities, and aviation uses such

as hangars. MAG Developments has

already secured outline planning permission

for the project – granted December 2011 –

to deliver a range of quality new business

premises and commercial space, split

across five separate plots, totalling around

35 acres.

6 LBA Growth Drivers: Commercial

In this section we examine the commercial potential of the Employment Hub through

providing an assessment of the mainstream industrial and office commercial markets

operating in Leeds. We have examined the market for land and premises across each

sectors at both the local LBA and wider Leeds levels.

The Leeds office market

Leeds is one of the UK’s largest regional office centres with particular strengths in the

financial and professional service sector. It is home to a number of major banks and

accountancy firms and is one of the most important legal centres outside of London. The

size and strength of the labour market drives demand for office floor space from a wide range

of sectors and occupier types and the City has a healthy out of town, as well as City Centre

office market.

Recent market conditions saw a number of large requirements in the market for Grade A

office space which total in excess of 46,450 sq m (500,000 sq ft), coupled with the

Government Property Unit (GPU) requirement and a flurry of upcoming lease events within

the city centre should lead to a significantly improved take up in 2017. 2016 saw a number

of developments which have performed well with lettings on MEPC’s Wellington Place.

MEPC have further demonstrated their confidence in the Leeds office market by

speculatively developing out 11,148 sq m (120,000 sq ft) at No. 3. This is due for completion

in December 2017 and is expected to attract pre letting interest.

The South Bank area of the city centre is identified as the natural growth for the city centre

and there is progress being made by Vastint at the Brewery Wharf site and CEG and Carillion

at the Temple Quarter that will have a major impact to the growth of the city centre’s emerging

South Bank district.

As figure 6.1 below shows, there a gradual increase in take up in the City Centre office

market from 2010 onwards with a peak in 2013. 2014 saw a decrease in take up, taking

accounting for the level of floorspace delivered the year before. The recent BREXIT

announcement created uncertainty in the market resulting in a fall in office take-up in 2016,

coupled with a lack of lease events in 2016 resulted in a below average annual take up

volume of 39,947 sq m (430,000 sq ft).

The Leeds office market saw a below average quarter for office take up, marking the end of

a uncertain year for the city. The Outlook for 2017 remains promising with the continuation

of speculative development with the announcement of the GPU requirement and the out of

town office market. Leeds has a strong development pipeline with 67,073 sq m (722,000 sq

ft) of office floorspace to complete over the next two years.

As demonstrated in figure 6.1 the long term average for the city is 47,000 sqm (505,000 sqft).

Figure 6.2 shows a similar pattern for the out of town market within the last 3 years with a

long term average over the last 10 years of 29,377 sqm (316,600 sq ft ).

Availability has been in a period of decline as a result of the lack of development activity with

the level of Grade A premises on the market falling to circa 20,000 sq m (215,000 sq ft), less

than half a year’s supply.

The development pipeline has responded. For example, No. 3 Wellington Place (120,000

sq ft) is under construction and due for delivery in December 2017. Vastint have put in outline

planning application for a mixed used development in the Southbank area of the city centre,

which will offer 85,003 sq m (915,000 sq ft) of commercial space.

Figure 6.1: Leeds City Centre Take up

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

Sq m

Year

Leeds City CentreTake Up

Figure 6.2: Leeds Out of Town Take Up

Looking at the future supply of land for office development in the City, there are a number of

major office schemes proposed as illustrated in Table 6.1 below. Within the City Centre, the

remaining development parcels at Wellington Place represent the most significant scheme

in the pipeline with approximately 10,000 sq m still to be built out. In the out of town market,

there are three major sites, with Thorpe Park offering land for over 10,000 sq m of office floor

space and Leeds Valley Park almost 10ha. The first phase of office development Kirkstall

Forge is now complete underlining the potential for new out of town office schemes in good

locations.

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Sq m

Year

Leeds Out of Town Take-Up (Sq m)

Table 6.1: Proposed office developments

However whilst these schemes may appear on the surface to ‘buy’ the City a substantial years’ supply, given the scale of annual take up, they may soon be exhausted. In strategic planning the future market there is a need to consider the next wave of office schemes to ensure there is enough of the right quantity and quality to meet market requirements. The Leeds City Council Employment Land Review 2010 Update provides an assessment of the requirements and availability for land for office use over the period 2010-2028. It concludes that there is a requirement for 880,000 sq m of office floor space, against a committed pipeline (i.e. permissions with planning consent) of 706,250 sq m, leaving a residual need for new land allocations to accommodate 173,750 sq m, as illustrated below:

Office sites Acres Ha Sq ft Sq m

City Centre

Wellington Place 0 943,000 87,608

Yorkshire Post Site 5 2.02 300,000 27,871

Lattitude 2 0.81 375,000 34,839

City Square House 175,000 16,258

Whitehall Riverside 500,000 46,452

Quarry Hill 685,000 63,639

Vastint 915,000 85,006

Tower Works Phase 2 130,000 12,077

Oakapple Commercial 145,000 13,471

Out of town

Thorpe Park 1,200,000 111,484

Kirkstall Forge 300,000 27,871

Leeds Valley Park 24 9.71

Total 5,668,000 526,575

Figure 6.3: Leeds office requirements versus projected availability / shortfall (sq m)

Source: Leeds Employment Land Review 2010 Update (Leeds City Council) In summary, office market fundamentals in Leeds are robust and the scale of demand year on year is such that Leeds needs to bring forward new development opportunities in both in and out of town locations to meet long term market requirements, underlining the potential of Leeds Bradford Airport.

LBA office market

There is a modest local office market operating in close proximity to Leeds Bradford Airport,

with a small number of well occupied office parks:

Airport West, Lancaster Way – modern purpose built business park located off A658

Harrogate Road opposite the White House Lane entrance to the airport

Moorfield Business Estate located immediately to the south of the Airport on the west

side of A658 Harrogate Road, comprising a mix of office and industrial accommodation

Aireview Court on the A65, period renovation multi occupancy premises

Rawdon Park, Green Lane, purpose built offices

Airport West is the most significant of these, a scheme delivered close to the peak of last

property cycle. The scheme was developed by Rushbond with the first two phases of the

scheme completed in 2007 comprising 6,900 sq m (75,000 sq ft) across seven buildings. A

further 2,480 sq m is proposed as part of Phase 3 with Phase 4 recently being implemented

as a pub/restaurant.

These office premises cater for a wide range of occupiers including professional services,

IT/media, airport related. Occupiers at Airport West include Nunwood Consulting (a

management consultancy), Towergate Risk Solutions (insurance brokers), WLP (digital

media company), Westgate Properties (property consultancy).

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

Total requirement 2010-2028 (sq m)

Planning pipeline (sq m) Shortfall

There has been a regular churn of occupiers and new lettings in recent years resulting from

the relocations both within and from outside the local area. The CoStar Interactive database

recorded a number of building lettings and sales in the last three years, as illustrated in Table

6.2 below, indicating a healthy demand for property on a leasehold and freehold basis.

Transactions have been predominantly at the smaller end of the size spectrum with lettings

typically 500 sq m (5,400 sq ft) and under.

Over the period 2007-2016, there has been an average of 1,593 sq m (17,151 sq ft) of floor

space transacted per annum, equating to a total floorspace take up over the last 10 years of

15,933 sqm (171,508 sq ft)

Table 6.2: Office transactions 2014-2017 within a 2 mile radius of LBA (source CoStar)

In respect of availability, according to CoStar there is currently approximately 5,560 sq m

(59,845 sq ft) of office floor space available on the market in the local area. The existing

properties are generally small in size and second hand.

Table 6.3: Existing Availability of office property within 2 mile radius of LBA (CoStar)

The existing office market at Leeds Bradford Airport demonstrates an average take up of

1,593 sq m (17,151 sq ft). Based on current availability of 5,560 sqm there is approximately

3.5 years supply of office floorspace in the local area.

Regional industrial market

The West Yorkshire industrial market is characterised generally by a falling supply and pent

up occupier demand as a result of a general lack of development activity in recent years.

The market has been driven by logistics with the continued growth in demand for distribution

locations, with growth in demand for a range of unit sizes. Key recent lettings in the area

relate to Amazon and John Lewis at the Leeds Enterprise Zone.

The market is dominated by the Motorway corridors of the M62 and M1, although the majority

of occupier demand to some extent is to the east of Bradford, to the west the limited

availability of serviced sites means it is untested. The key industrial locations within the

Yorkshire region are the Leeds Enterprise Zone, Wakefield and Castleford/Normanton in

what is known as the ‘golden triangle’, located within close proximity to the M62, A1 and M1.

In Yorkshire, the majority of occupier activity has been at the smaller end of the market, and

in particular activity has been characterised by retailers and third party logistic companies

acquiring space in smaller hubs in better locations, in order to support the last mile logistics

model.

Despite an overall increase in availability (7%), grade A has fallen by 22% since December

2016 and left occupiers looking for better quality space with limited options. Demand for

industrial property across the region remains strong, as a lack of good quality space, in most

size ranges, continues to be the principal driver in the occupier market. The development

market has been traditionally dominated by design and build schemes with a pre-let in place.

Speculative development is limited and often underwritten by public sector incentives, as at

Leeds Enterprise Zone. There have been some genuine speculative development schemes

including Wilton at Aire Valley and St Modwen at Doncaster and Verdion at iPort and Newhall

Business Park located on the M606 by Frank Marshall Estates.

Developers have responded to the grade A supply shortage in the sub 100,000 sq ft market

with 45,650 sq ft set to be developed at Gateway Trade Park, Haworth Estates / Evans Group

declaring 150,000 sq ft of spec development at Gateway 45 (formerly Temple Green) and

Wilton Developments announcing their intentions to commence 76,000 sq ft of spec

development at their Latitude scheme, having already committed to a speculative scheme of

80,000 sq ft at Kinetic 45 in East Leeds.

We are continuing to see rental growth across the region in the industrial and logistics

markets. Prime rents for new build industrial properties in Leeds now stand at £6.50 – £7.00

per sq ft for grade A industrial space below 20,000 sq ft (and for much smaller units higher

rates are being achieved) and £5.50 – £6.00 per sq ft have been achieved for new buildings

between 20,000 sq ft and 50,000 sq ft. The secondary industrial market in the 20,000 -

50,000 sq ft category has also fared well, with recent transactions at adjacent units to the

subject property including RSL Steeper recently taking 52,629 sq ft and Troy Foods taking

46,462 both at £5.25 psf on five year term certain.

To date the market has displayed a degree of resilience to the uncertainty created by the EU

referendum and with the exit from the EU there remains a cautious approach in the

development market in particular.

The growth of online retail is continuing to drive the ‘big box’ market and there is strong

demand from retailers requiring large distribution units of over 9,300 sqm (100,000 sq ft) on

well located sites. However, there are 2 available units of over 12,000 sqm (130,000 sq ft)

on the M62 in Wakefield that were built speculatively and which remain vacant. The growth

in e-commerce is also driving the ‘last mile delivery’ model and requirements from distribution

businesses for units that are in close proximity to the motorways and urban conurbations.

There are a lack of available Grade A distribution/manufacturing units in the 2,700-9,300

sqm (30,000-100,000 sq ft) range as a result of continued occupier demand and a lack of

new development. Development has only really come forward where the public sector has

played an enabling role, albeit there are exceptions to this and it is anticipated that there will

be further speculative development coming forward in strong market locations (e.g. Latitude

2).

There are a number of large scale serviced sites around the Leeds/Normanton/Wakefield

areas (accounting for the Leeds EZ sites) which are likely to absorb much of the demand for

larger distribution units (as well as smaller manufacturing units) although there is a lack of

available serviced sites to the west of Leeds along the M62 Corridor. There is an opportunity

for the M62 Corridor EZ sites to meet the demand for units at the 100,000 sq ft level and the

sites should provide a range of manufacturing and distribution unit sizes within the 0-100,000

sq ft range (depending upon the specific site location), with a range of flexible plots and

buildings to meet occupier demands across the 30,000-80,000 unit sizes specifically. It will

also be important to ensure there is an appropriate supply of available accommodation at

the sub-20,000 sq ft and sub-10,000 sq ft unit size range.

Despite lower national take-up figures, take-up in Yorkshire and the Humber reached 4.2m

sq ft in 2015, the highest recorded since 2009. An enormous 58% of this is attributed to a

very strong Q1, which was the strongest quarter on record for the region.

Those occupiers that have remained active have tended to be the ones seeking the highest

quality buildings. Consequently the proportion of Grade A take-up in 2015 was the highest

on record, accounting for 47% of all take-up. Build-to-suit deals accounted for around half of

Grade A take-up in H2 2015. Given that the cited reasons for taking higher quality space will

continue to be relevant we expect the higher proportion of Grade A take-up in 2017.

The growth of online spending means that e-retailing is now the most influential sector for

the UK industrial market, with retailing accounting for 37.9% of total take-up in 2015, the

highest since 2010. Amazon was by far the most active occupier in 2015, taking up 12

buildings over 50,000 sq ft in size across five regions totalling 2.9m sq ft. Much of this wide

ranging activity is to accommodate Amazon’s “same day delivery” service and last mile

logistics. Amazon continued their aggressive expansion plans in 2016 with the recent

acquisition of 1.2 million square foot at Verdions’ iPort scheme at Doncaster and a mandate

for the next 12 months rumoured to be to acquire 10 million sq ft.

There is a supply shortage of large grade A industrial and logistics stock in the region due to

the flow of the development pipeline halting over the course of the economic downturn in

2007. The shortage of supply and renewed confidence in the economy and market over the

past two years have pushed a handful of developers to begin speculatively building

properties to fulfil the gap in supply.

Leeds employment land market

The above charts provide details of the take up and availability of land for the region as a

whole which disguise the more acute shortage of readily available land and premises in the

Leeds area. The lack of readily available sites and premises in Leeds has meant that many

occupiers have failed to find suitable accommodation and as a result have sought property

in other regions. Anecdotal feedback from inward investment agents and economic

development specialists active in the Leeds market has also indicated the difficulties in being

able to match inward investment opportunities to accommodation, particularly in the R&D

sector.

Cushman and Wakefield has mapped all the industrial sites over 4 ha (10 acres) that we are

aware are currently on the market in the Leeds area. Figure 6.4 below also includes office

sites. It illustrates that there is an uneven distribution and with limitations to the supply of

sites to the north of Leeds. It also shows the limited range of property segments catered for

with no dedicated innovation facilities or science parks, in sharp contrast to other competing

city regions such as Manchester and Sheffield with their Airport MediPark and Advanced

Manufacturing Park respectively.

The limitations to Leeds’s land and premises portfolio underlines the potential role that a

growing LBA hub employment zone could have in enhancing the city’s offer to the investor

and occupier markets.

The Council’s Employment Land Review 2010 update confirms the quantitative need for new

site allocations across the administrative area. The document provides an assessment of

the requirements for and supply of employment land in Leeds over the course of the next

Local Plan. It concludes that there is a need for 536 ha of employment land for industrial

purposes over the period 2010-2028, set against a portfolio of 350 ha to be rolled forward

(these being comprised of sites which the review considers are suitable for continued

employment use), leaving a residual requirement of 186 ha of new allocations, as shown by

Figure 6.5 and 6.6 below.

The Employment Land Review also provides a sub area analysis of need and supply to

inform the process of new allocations. The analysis is based on socio-demographic as

opposed to market factors. It shows that there is a marginal requirement for new allocations

in the ‘Outer North West’ zone (the zone in which LBA is located), but that when aggregated

for all north Leeds zones, there is actually a significant shortage and a need for new

allocations, as illustrated by Figure 6.8 below. This further demonstrates the role that LBA

can play as an extended employment zone in helping meet the future employment

requirements of the City.

Figure 6.4: Supply of strategic employment sites in Leeds (over 4 ha)

City Centre

Thorpe Park

Leeds Valley Park

Haigh Park

Skelton Grange Road

TowngateLink

BruntcliffeRoad

Enterprise Zone

Nepshaw Lane/Gelderd Rd/Asquith Ave

KirkstallRoad South Bank

Employment sites

Figure 6.5: Leeds employment land requirements (ha)

Figure 6.6: North Leeds employment land requirements (ha)

In 2015 Leeds Council commissioned a further study to examine the local needs for

additional employment land within the North West area of Leeds (Assessment of

Employment Land Needs for North West Leeds, BE Group June 2015). The study confirmed

that there is a need for new allocations of land over and above existing allocations to meet

employment land needs in the order of 12-14 ha. It did not however consider the wider need

0

100

200

300

400

500

600

Land equivalent (ha) Sites to be retained and carried forward (ha)

Shortfall

0

20

40

60

80

100

120

140

160

180

Inner North East

Inner North West

Outer North East

Outer North West

Total North Leeds

Land requirement to 2028 (ha)

Existing porfolio (ha)

across the District as a whole or examine the need that a strategic employment site at the

airport could play in meeting the District wide need.

A Strategic Employment Land Review produced on behalf of the Leeds City Region LEP by

Andy Haigh Associates in October 2016 highlighted further evidence in support of the case

for a strategic land allocation at the Airport. A key finding of the report was that there was

shortages of the right type of land in the right location to meet future economic development

needs, in particular related to specialist provision for University spin offs, advanced

manufacturing and strategic sites for investment. The report recommends that further work

be carried out to identify and allocate strategic employment sites that can meet this specialist

need and explicitly identifies the Employment Hub at the airport as an opportunity which

should be explored.

LBA Industrial market

At the local level there is a significant amount of industrial accommodation in the immediate

surroundings of the airport, concentrated on the following estates

Leeds Bradford Airport Industrial Building, A658 Harrogate Road

Moorfield Business Estate, A658 Harrogate Road

Carlton Industrial Estate, Cemetery Road

Westfield Industrial Estate, Kirk Lane, Yeadon

South View Business Park, off A65

These parks are well occupied and accommodate a range of light industrial and

manufacturing occupiers.

There has been a regular churn of occupiers and new lettings in recent years resulting from

the relocations both within and from outside the local area. The CoStar Interactive database

recorded a number of building lettings and sales in the last three years, as illustrated in Table

6.4 below, indicating a healthy demand for property on a leasehold and freehold basis. Over

the last 10 years (2007-2017) there has been an average of 10,757 sq m per annum (115,000

sqft).

Table 6.4: Industrial transactions 2014-2017 within a 2 mile radius of LBA (source

CoStar)

Existing availability is limited to one building at the Leeds Bradford Airport Industrial Estate,

totalling 3,127 sq m (33,663 sq ft):

Table 6.5: Existing Availability of Industrial property within 2 mile radius of LBA

(CoStar)

As with the local office market, the level of occupier activity and transactions on the estates

surrounding Leeds Bradford Airport underlines the potential for further development in the

future. On the basis of the prevailing average take up levels (10,575 sq m), the existing

supply of 3,127 sq m demonstrates that demand outstrips current supply.

Summary

Commercial market conditions are improving and displaying resilience in the face of macro-

economic and political uncertainty. Increasing take-up and falling supply are evident and

there are several genuine speculative development schemes underway across the industrial

and office sectors.

Looking at the long term, there is a projected need for new high quality serviced employment

land to meet market requirements. The dynamics of the office market in Leeds are such

that there is a strong in and out of town market and a real opportunity for LBA to fulfil the

future requirements of the out of town market. There is a shortage of industrial sites – both

quantitative and qualitative – to meet the long term market requirements of Leeds with an

acute shortage of sites in the north Leeds area. Allied to the potential for surface access

enhancements and airport related growth, there is considerable potential for commercial

pressures to drive the delivery of major hub and employment zone at the Airport.

7 Airport Land Development Strategy

Demand for an Employment Hub at LBA

There is a major opportunity to enhance Leeds’ commercial portfolio of land and premises

through the creation of an Employment Hub at the airport. The Hub will reinforce the growth

of the Airport and will help drive forward the economic ambitions set out in the LEP’s Strategic

Economic Plan, in particular plugging gaps in the city’s commercial property offer and driving

forward the emerging industrial strategy for advanced and innovative manufacturing.

There is an established demand for new commercial land and floor space at Leeds Bradford

Airport that arises from the concentration of occupiers locally and the growth of the Leeds

economy and its associated accommodation requirements. The collated evidence set out in

Section 6 shows that there is a healthy churn of new lettings year on year in respect of both

industrial and office accommodation and, over time, there have been new development

schemes such as Airport West and Moorfield Industrial Estate which have been built to

respond to these occupier requirements.

Looking forward, we consider there to be a major opportunity to expand the commercial offer

alongside the growth of the airport and surface connections to create a hub that exploits the

potential of the aviation sector and the attributes of the location for office and industrial

occupiers seeking an international ‘front door’. There are a number of sources of demand

that can be targeted:

Innovative manufacturing and Research & Development (R&D) businesses linked to the

growth strategies of the LEP and HE sectors

Occupiers expanding/downsizing or moving from local business estates – as

demonstrated by the collated evidence in Section 6

New occupiers seeking airport or north Leeds location – Cushman and Wakefield is

aware of recent requirements from occupiers seeking airport location in respect of both

office and industrial accommodation

Footloose national/international occupiers seeking high quality/differentiated and

branded location

Occupiers linked to the airport – operational and non operational activities linked to the

growth of the airport, as dealt with in Section 5 of this report.

The hub can reinforce the economy of Leeds City Region providing a differentiated

commercial real estate opportunity to attract new investment and growing firms, particularly

focused on knowledge based businesses with international networks.

In respect of the office sector there is potential to attract aviation occupiers including flight

operating businesses with requirements for national/regional HQ and call centre activities.

Figure 7.1: Drivers of LBA Employment Hub

In terms of the Industrial sector, there are three sub markets: aviation related (e.g. caterers,

freight forwarding / general logistics, repair services); innovative manufacturing (in a

combination of property types such as light industrial, R&D, hybrid) and general industrial

and logistics. The potential for growth exists as a result of the anticipated growth of air

freight, the capacity of existing airside facilities and supplier chain arrangements. The latter

will absorb existing pent up demand and investment from new firms particularly for occupiers

with international networks (client/parent companies).

Offices will be a combination of multi occupancy buildings let to SMEs (potential for a Regus

type managed workspace), and; larger single occupier firms such as flight operator regional

HQs and travel companies.

In order to support the strategy for the Employment Hub there will need to be a mix of uses

to create a place and identity (not just a business park) – sectors to include hotel/leisure,

retail as well as office and industrial development. Surface access improvements will also

be necessary.

Quantitative Justification The proposed allocation of land for the Employment Hub is justified by:

Policy

• Support Government aviation policy

• Support ambitions of LCR SEP

Economy

• Reinforce growth of airport / LCR economy

• Accommodate LCR growth sectors

Commercial

Aviation

• Facilitate growth of operations on airport

• Drive growth for business activities off airport

• Meet local and strategic demand for commercial land and floor space

LBIA Employment

HUB

The proposed allocation of the site as a key element in meeting the Core Strategy identified need

of 493 ha of employment land, following detailed assessment of site options

The particular shortage of employment sites to the North of the City and the identified need for

new allocations of employment land in close proximity of Leeds Bradford Airport

The alignment of the Local Plan to the economic development needs of Leeds area as clearly

documented in the Leeds City Region’s Strategic Economic Plan which identifies the Employment

Hub as a Strategic employment site.

The unique circumstances of the Employment Hub provide further support to the case for

the site’s allocation for employment. Specifically:

The opportunities for the Employment Hub to support the sustainability and growth of the airport,

allowing for the growth of supply chain related activities and support functions to the Airport; and

The site’s location at the Airport provides a differentiator for occupiers and as such offers the

potential to attract new occupiers to Leeds that might not otherwise locate in Leeds (for example

those foot loose occupiers seeking an airport location).

The site’s allocation will therefore provide an important role in meeting Leeds’ economic

development needs.

Development quantum and indicative masterplan

A conceptual masterplan has been prepared to illustrate the potential of the Employment

Hub. The masterplan has been produced by 5plus architects in collaboration with WYG and

Cushman and Wakefield. The masterplan incorporates LBA’s existing land holdings together

with the parcel of Greenfield land to the north (draft allocation EG3) which is under their

control. The masterplan illustrates the indicative route of road and rail surface access

improvements together with two differentiated land use zones for the following development:

Air Innovation Park

A Business Park providing accommodation for occupiers in identified LCR growth sectors.

A high quality environment with a focus on innovative manufacturing facilities with strong

linkages to University based R&D. The Air Innovation Park will incorporate a range of

accommodation types to meet the variety of business functions benefiting from the airport

location including offices, R&D hybrid units, light industry and logistics. The business park

will respond to an identified gap in the supply of quality land and property options for inward

investors and high value growth businesses seeking well connected and high profile

locations.

Airport Village

A new mixed use commercial centre providing vital services and accommodation to

support the growth of the airport. This zone will provide accommodation for activities

directly and intrinsically related to the economy of the airport, such as flight operating

company (/regional) headquarters and support functions, hospitality and general amenities

(comprising new hotels, conference and meeting facilities and restaurants and retail).

Figure 7.1 on the following page illustrate the concept plan and development plots.

Figure 7.1 Indicative Masterplan – developable areas

Table 7.1 Development Schedule

Table 7.2: Anticipated Delivery Timescales

Plot Use Footprint Floors GIA

sq.m. sq.m.

Airport Village

A Retail 4,459 1 4,459

B Office B1 2,150 2 4,300

J Office B1 7,860 2 15,720

K1 150 bed Hotel 900 5 4,500

K2 Office B1 3,930 2 7,860

Airport Innovation Park

C Innovative manufacturing (B1 and B2) 5,550 1 5,550

D Innovative manufacturing centre (B1 - office, conference, workshops, labs) 5,550 2 11,100

E Innovative manufacturing (B1 and B2) 16,489 1 16,489

F General industrial and Logistics (B2/B8) 11,900 1 11,900

G General industrial and Logistics (B2/B8) 9,350 1 9,350

H Innovative manufacturing (B1 and B2) 5,828 1 5,828

I Innovative manufacturing (B1 and B2) 4,588 1 4,588

Plot Use Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Local Plan Planning Infrastructure Rail complete Road complete

Airport Village

A Retail 2,200 2,259

B Office B1 2,150 - 2,150

J Office B1 3,144 3,144 3,144 3,144 3,144

K1 150 bed Hotel 4,500

K2 Office B1 1,572 1,572 1,572 1,572 1,572

Airport Innovation Park

C Innovative manufacturing (B1 and B2) 1,388 1,388 1,388 1,388

D Innovative manufacturing centre (B1 - office, conference, workshops, labs) 5,550 5,550

E Innovative manufacturing (B1 and B2) 1,499 1,499 1,499 1,499 1,499 1,499 1,499 2,998 2,998

F General industrial and Logistics (B2/B8) 5,950 5,950

G General industrial and Logistics (B2/B8) 4,675 4,675

H Innovative manufacturing (B1 and B2) 1,166 1,166 1,166 1,166 1,166

I Innovative manufacturing (B1 and B2) 1,147 1,147 1,147 1,147

Table 7.1 above illustrates an indicative schedule of accommodation based on the

masterplan that has been developed, taking into consideration the various market, economic

and policy factors that will influence the mix. In total there are 27,880 sq m GIA

(approximately 300,000 sq ft) of office floor space and 53,705 sq m (approximately 580,000

sq ft) of industrial accommodation.

An innovative manufacturing centre is proposed which could include a combination of office,

labs, workspace, conference and support facilities similar to that which has been successfully

implemented on other advanced manufacturing business parks. The proposed centre will

help to anchor and stimulate the creation of innovative manufacturing activities on the wider

site and will provide accommodation for driving forward both LEP/WYCA (West Yorkshire

Combined Authority) and Higher Education agendas. Initial consultation with WYCA has

indicated support for the concept which it is considered could form a key part of the LEP’s

emerging Industrial Strategy.

The retail floor space totals 4459 sq m (approximately 48.000 sq ft) which is envisaged would

represent a combination of convenience retail and eating and drinking establishments to

provide the amenities to support the business park. A single 150 bed hotel is also included

which is considered will support the growth of the airport.

The accommodation listed is indicative only, and it should be noted that in practice we see

the delivery of the scheme being flexible to the requirements of the market and the investment

requirements of public sector partners.

Delivery Programme

Table 7.2 provides an indicative development programme to illustrate how the site could be

delivered and built out within the 12 year period (2017 to 2028). It assumes a three year

lead-in period to include the process for adoption of the Local Plan site allocation, preparation

of planning application(s) and receipt of consents, site preparation and infrastructure

installation prior to development completions.

The overall rates of delivery of the industrial and office floor space are considered to be

realistically achievable given the various commercial, economic and aviation growth drivers

as documented in this report. The overall rates of delivery of industrial floor space average

4,475 sq m GIA per annum over the 12 year period, which compares with an annual average

of industrial floor space lettings of 10,757 sq m GIA within the local area. Office development

assumptions average 2323 sq m GIA over the 12 year period which compares with an

average of floor space lettings in the local area of 1593 sq m per annum; whilst the rate of

delivery at the Employment Hub is projected to exceed that achieved locally, this is not

considered unrealistic given the catalytic impacts of surface access improvements in

particular the rail station.

Delivery mechanisms

LBA will seek to work in collaboration with a third party developer/investor in a joint venture

capacity or look to dispose of parcels of land on the basis of an agreed masterplan.

Infrastructure improvements are a key consideration in the delivery programme.

Collaboration between public and private sector partners will be enable the benefits of the

Employment Hub to be maximised and the following measures are being developed with

partners:

Creation of Enterprise Zone status – many competing cities across the UK have

designated Enterprise Zones on land adjacent to airports to enable the EZ incentive

package to be used to attract occupiers and facilitate enabling infrastructure investment.

There is an opportunity for Leeds City Region to offer the business rate discounts (up to

£55,000 per annum for five years) to occupiers within the Airport Employment Hub,

funded by business rate additionality accumulated in Leeds Enterprise Zone. This would

help to both brand the Employment Hub in a positive way.

Land value for infrastructure funding – where the value of the land is deployed to pay

for the infrastructure works required to unlock / enable delivery. This is an approach that

has been used to enable the delivery of public sector sites that have significant

enabling/infrastructure costs or abnormals and the public sector wishes to help

facilitate/enable delivery.

Tax increment financing (TIF) – under the current arrangements that came into effect

from 1st April 2013, local authorities are entitled to retain 49% of business rate income

generated within their areas. Therefore, the potential exists to establish a TIF zone

around the Employment Hub site that would enable finance to be raised against the

anticipated additional business rate receipts that the Council retains.

Direct public investment – innovation and R&D parks tend to exist because of public

sector and HE investment. The possibility of utilising existing and emerging funding

streams such as the Local Growth Fund to invest in property projects is being examined

in view of the clear alignment of the Growth Hub masterplan and the Strategic Economic

Plan for Leeds City Region.

Other business support grants - in accordance with the range of public sector support

available through the LEP and in connection with the emerging Industrial Strategy.

8 Economic Impact Assessment

An initial economic impact assessment has been undertaken to demonstrate the significant economic potential of the LBA Employment Hub proposals, as below.

Development programme assumptions The timing of delivery of the proposed development will depend on a range of factors including:

Occupier demand

Planning process, specifically the timescales for adoption of the Council’s allocations document

Timing of expansion in operational land and property requirements of the Airport

Strength of the development market and the timing and length of the development cycle

Timing of infrastructure installation

Appetite of partners to invest and nature of investments

Broader macro-economic conditions.

An indicative development programme has been devised as per table 7.2 in accordance with the phasing strategy set out in Section 7 based on the following broad assumptions:

Office development is delivered at an average rate of 2323 sq m per annum over the assumed 12 year delivery period, although is not assumed to commence until 2024 when the surface access road will be completed.

Industrial and logistics is assumed to be delivered at an average level of 2705 sq m per annum over the 12 year period.

For the purposes of the assessment, innovative manufacturing space is assumed to be split 90% manufacturing space and 10% office space (innovative manufacturing centre is assumed to be 50% office space and 50% manufacturing space although in practice could be a hybrid of other uses e.g. laboratory space). The innovative manufacturing space is assumed to be delivered at an average rate of 2,420sq m (26,000 sq ft) per annum between 2020 and 2028. Innovative manufacturing space will comprise essentially R&D space which will need to be flexible to meet occupier demand.

Retail and leisure – one 150 bed hotel is assumed in 2024 and the retail uses are assumed towards the back end of the programme (2025/26) reflecting the impact of the growth of the airport.

Table 8.1: Assumed Development Programme

The following sections examine the economic benefits of hub delivery. It has been assumed for the purposes of this analysis that the area of impact is at the Leeds City Region level. All economic benefits have been modelled over a 25 year timeframe from the present day.

Job hosting capacity (gross and net additional)

Employment benefits have been estimated through the application of standard worker floor area ratios which are presented as gross and net. Gross jobs are estimates of the job hosting capacity of the development based on the scale of development anticipated. Net jobs take account of factors such as leakage, displacement and multiplier effects. The figures quoted are based on the full job hosting capacity of the scheme and make no allowance for voids and therefore should be interpreted as the maximum job hosting capacity of the scheme.

Table 8.2 – employment hosting capacity

Gross jobs 4,620

Net additional jobs 3,059

A breakdown of the gross/net additional jobs by use type is set out below:

Table 8.3: Gross and net additional jobs by use type

Assumptions

Gross jobs have been estimated through applying the following employment densities to the floorspace in accordance with the 2015 HCA Employment Density Guide (3rd Edition):

Table 8.4 – employment density assumptions

Use Type Employment Density –sqm per FTE (GIA/GEA unless

specified)

Office 10 (NIA)

Innovative

manufacturing/R&D

Hub building - Assumed 50% manufacturing and 50% office

(likely to also comprise conference facilities, labs etc)

Wider innovative manufacturing floorspace – assumed 90%

manufacturing and 10% office

Retail 18 (NIA)

Hotel 1 employee per 2 bedrooms

Industrial 36

Logistics 70

To estimate the net additional employment capacity, consideration has been given to factors of additionality by use type as below (note for the wider innovative manufacturing floorspace beyond the innovative manufacturing centre/hub a leakage rate of 7% and displacement rate of 15% is assumed).

Table 8.5: Additionality assumptions

Further explanation is provided below and all assumptions have been ‘sense checked’ against the 2014 HCA Additionality Guide. Leakage – analysis of Census travel to work data identifies that at the LCR level, there is a leakage rate of 7% and this has therefore been used for all of the use types apart from office and innovative manufacturing related employment. A higher rate of 15% has been prudently applied to these higher value uses to reflect the increased likelihood of these attracting employees residing outside of the LCR. Displacement – assumptions range from 30% for innovative manufacturing employment through to 70% for hotel/retail. This reflects the fact that higher value R&D/innovative manufacturing and office activity is likely to result in a lower level of displacement of existing economic activity within the City Region. A proportion of the innovative manufacturing/R&D space may also be occupied by new businesses and spin-outs from HE establishments which would further reduce the propensity for displacement. Lower value logistics/leisure/retail uses by their very nature have a propensity for high rates of displacement. The HCA guidance refers to 25% as being low and 75% as being high and these therefore correlate with this.

Multiplier – as per the HCA Additionality Guidance Paper. An average of the local and regional multiplier was applied to reflect the City Region scale of assumed impact for this assessment. Deadweight – a nil deadweight position has been assumed throughout (i.e. in the absence of the LBA proposals, no other economic outputs would be delivered on this site).

Gross Value Added (GVA) GVA is used as an indicator of economic output and measures the contribution to the economy of individual producers, industries or sectors. It is estimated through the application of typical annual GVA per worker data to the net additional job capacity estimates outlined above. Impacts Cumulative undiscounted and discounted GVA impacts over a 25 year timeframe are presented below:

Table 8.6: GVA impacts

Cumulative GVA impact over 25 years £3.118bn

PV Cumulative GVA impact over 25 years

(assuming 3.5% discount rate)

£1.834bn

Assumptions

Average GVA per worker figures by sector at the Leeds Local Authority level have been estimated based upon the total annual GVA output for a number of relevant sectors (ONS, NUTS 3 data, 2012) divided by the total number of workers in the sector (Business Register and Employment Survey, ONS, 2012). This has then been multiplied by the net additional job outputs associated with each of the commercial components of the scheme. In some instances, informed SIC related assumptions were made to align the GVA data with the employment data. Innovative manufacturing based GVA has been based upon an average of the office and manufacturing use types. The following GVA per worker figures were applied based upon this: Table 8.7: Assumptions by use type

GVA data is not published at a detailed SIC level at the LA scale which explains why a generic GVA per worker of £34,460 has been applied to logistics/hotel/retail uses based upon the GVA and employment data for the ‘distribution, transport accommodation and food’ classification. The HM Treasury discount rate of 3.5% was applied to calculate the Net Present Value of the cumulative GVA impacts over the 25 year period.

Business rate income Under the arrangements that came into effect from the 1st April 2013, local authorities can retain up to 50% of business rate income generated locally. Commercial development sites such as the Airport Hub that attract new occupiers into the area therefore offer the potential for generating additional business rate receipts for the local authority. Under current Government proposals, there could be the potential for further local rate retention locally from 2019/20. The proposed scheme has the potential to deliver the following business rate incomes which could be retained by the local authority (in full/in part depending upon the rates devolution consultation that is underway). These estimations are based on a number of assumptions around likely rateable values and are based on the current UBR multiplier of 2017/18 of £0.497 and modelled over a 25 year period.

PV total rates income (assuming 100% local retention) of £41.8m

PV total rates income (assuming 50% local retention i.e. the current position) of £20.9m

Wider benefits The proposals will deliver a number of additional economic impacts:

Supporting additional Airport operational growth – the proposals will enable existing non-operational airport uses to relocate to free up land for core airport operational growth. This would enable the airport to enhance the scale and quality of its offer and operations, both in terms of passenger and freight numbers, resulting in significant economic benefits to the City Region.

Creating construction jobs – the delivery of the proposed new commercial floor space will support a significant number of construction jobs over a 15-25 year period, a large proportion of which could be sourced locally. The supply chain expenditure relating to this construction activity could also be significant.

Leveraging private sector investment – the delivery of the scheme will be private sector led and will therefore leverage a significant level of private sector investment to the City Region given the scale of the proposals.

Providing skills development and training opportunities – the proposals will attract high value uses and occupiers which will provide high quality and accredited skills and training development opportunities. There is the potential for the existing FE presence at the Airport to expand and for it to attract additional FE/HE activity, particularly though the

proposals for innovation-based activity on part of the site. There is also the opportunity for additional aviation related skills and learning providers to be based at the Airport as it expands.

Providing local employment opportunities – the proposals will create a significant number of and range of employment opportunities to meet the demographic needs of the LCR economy. It is envisaged that a high proportion of the jobs will be taken by local people given the low rates of leakage across the City Region as a whole.

Driving City Region competitiveness – the proposals have the potential to attract significant inward investment and to enhance the overall offer of the City Region economy as a business destination to ensure that it can compete with locations such as Manchester and Birmingham on an international level.

Summary A summary of the core quantitative economic impacts modelled over a 25 year period is presented below in table 8.8. Table 8.8: Economic Impact Summary

New commercial floorspace

101,644 sqm (GIA)

New gross job hosting capacity (FTEs)

4,620

New net additional job hosting capacity (FTEs)

3,059

Cumulative GVA over 25 years

£3.118bn

PV Cumulative GVA over 25 years

£1.834bn

Business rate income uplift (assuming 100% local retention)

£37.4m

Business rate income uplift (assuming 50% local retention)

£18.7m

report re leeds bradford international airport ... · an employment land study dated october 2016...

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